Trading Plan for 1/17
Thursday had room up to 1291.00… without buyers gaining traction for their efforts. The cash session close equated to 1290.75. Friday’s open gapped down to 1282.00, and session lows tested 1273.00.
Pattern points… (Setups and technicals)[pay]
The big question is whether Friday’s recovery attempt succeeded where Thursday’s recovery had failed. Namely, was the close high enough to absorb another downdraft, or to avoid it altogether.
Nope.
Friday’s close did recover back above 1282.00-1283.25 — into the session’s last hour, no less. That’s the good news. It’s also the bad news. Late Friday recoveries are tenuous. Firming 3 points into the cash session close then surged 7 points post-close to 1289.50 resistance. Its test held.
Other good news: Friday’s dip to 1272.75 did neutralize the attraction back down to the prior week’s 1277.50 “lower prior highs.” It also filled the outstanding gap at 1275.50. Closing higher Tuesday would be bullish, but not until then.
One more pair of good news / bad news is Friday’s “ineffectual pessimism.” The open gapped down, prior lows were probed, and the entire session was spent in negative territory — yet the session closed above the morning’s highs. If only the afternoon had probed the morning’s low, then sellers would be trapped. Instead, buyers may have been satisfied.
S&Ps downgraded half the Eurozone Friday, while the Euro closed at prior lows around 1.2670. Closing back above 1.2750 and 1.2824 Thursday risked stretching the recovery too far too soon. Obviously it did. Withstanding the weekend’s news to close positive after fulfilling the 1.2650 target would be very bullish. Otherwise, only bearish.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping down 10-13 points Monday Tuesday would reject Friday’s closing rally back under its afternoon low. And that would trigger a session-long decline. Just breaking back under 1282.00-1283.25 would reject Friday afternoon’ fresh session highs. But firming above 1289.50 through the open would extendn higher, to retest 1296.00,.[/pay]
Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.